Among the options provided, the security that would likely pay the highest interest rate is:
c. a bond issued by a start-up company.
Here's a brief explanation for each option:
a. A mutual fund with a portfolio of blue chip bonds - Generally, blue chip bonds are from well-established companies, which typically have lower yields due to their lower risk.
b. A bond issued by a blue chip company - Blue chip companies are stable and have a lower risk of default, resulting in lower interest rates compared to riskier investments.
c. A bond issued by a start-up company - Start-up companies typically have higher risk profiles, and to attract investors, they often offer higher interest rates to compensate for that risk.
d. A municipal bond issued by the state of Texas - Municipal bonds are often seen as relatively safe investments, and while they may provide tax advantages, their interest rates are generally lower compared to higher-risk options.
Therefore, due to the higher risk involved, a bond issued by a start-up company would likely offer a higher interest rate compared to the other securities listed.